August 3, 2023
Top 10 Stock Spark New Zealand Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Spark New Zealand – Top 10 Stock in New Zealand Stock Exchange Index NZSX 50
Spark New Zealand is listed as a top 10 stock on August 03, 2023 in the market index NZSX 50 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 63 (high 63% performer), Obermatt assesses an overall buy recommendation for Spark New Zealand on August 03, 2023.
Snapshot: Obermatt Ranks
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When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Spark New Zealand Buy
360 METRICS | August 3, 2023 | |||||||
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VALUE | ||||||||
VALUE | 29 |
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GROWTH | ||||||||
GROWTH | 29 |
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SAFETY | ||||||||
SAFETY | 63 |
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SENTIMENT | ||||||||
SENTIMENT | 87 |
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360° VIEW | ||||||||
360° VIEW | 63 |
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ANALYSIS: With an Obermatt 360° View of 63 (better than 63% compared with alternatives), overall professional sentiment and financial characteristics for the stock Spark New Zealand are above average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Spark New Zealand. The consolidated Sentiment Rank has a good rank of 87, which means that professional investors are more optimistic about the stock than for 87% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 63 or better than 63% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 29, meaning that the share price of Spark New Zealand is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 29. ...read more
RECOMMENDATION: With a consolidated 360° View of 63, Spark New Zealand is better positioned than 63% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 87) and safe financing practices (Safety Rank of 63), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of Spark New Zealanḍ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Spark New Zealand very positive
ANALYSIS: With an Obermatt Sentiment Rank of 87 (better than 87% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Spark New Zealand is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Spark New Zealand. Analyst Opinions are at a rank of 32 (worse than 68% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 50, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Spark New Zealand. Even better, the Professional Investors rank is 100, meaning that professional investors hold more stock in this company than in 100% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 78, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 78% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 87 (more positive than 87% compared with investment alternatives), Spark New Zealand has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Spark New Zealand Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 29 (worse than 71% compared with alternatives), Spark New Zealand shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Spark New Zealand. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 79% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 27 which means that the stock price compared with what market professionals expect for future profits is higher than 73% of comparable companies, indicating a low value concerning Spark New Zealand's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 36 which means that the stock price compared with what market professionals expect for future profit levels is higher than 64% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 3 is also low. Compared with invested capital, the stock price is higher than for 97% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 29, is a hold recommendation based on Spark New Zealand's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Spark New Zealand? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Spark New Zealand only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: Spark New Zealand Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 29 (better than 29% compared with alternatives), Spark New Zealand shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four metrics below average for Spark New Zealand. While Profit Growth has a good rank of 54, as professionals currently expect the company to grow its profits more than 54% of its competitors, all other growth indicators are below market averages. Sales Growth has a rank of 38, which means that currently professionals expect the company to grow less than 62% of its competitors, while Capital Growth has a rank of 27 and Stock Returns have been below market median, with a rank of 47 (53% of alternative investments were better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 29, is a hold recommendation for growth and momentum investors. While revenue growth and capital growth are good growth momentum indicators, profit is less reliable, because profits may increase due to cost-cutting measures which typically indicate negative growth momentum. "You can save a dollar only once" is the saying about such situations. Growth Investors should look at company priorities closely if they are interested in growth, because the increase in profits is not usually an indicator of growth, and stock prices have been below market, too. ...read more
Safety Strategy: Spark New Zealand Debt Financing Safety above-average
SAFETY METRICS | August 3, 2023 | |||||||
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LEVERAGE | ||||||||
LEVERAGE | 24 |
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REFINANCING | ||||||||
REFINANCING | 61 |
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LIQUIDITY | ||||||||
LIQUIDITY | 65 |
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CONSOLIDATED RANK: SAFETY | ||||||||
CONSOLIDATED RANK: SAFETY | 63 |
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ANALYSIS: With an Obermatt Safety Rank of 63 (better than 63% compared with alternatives), the company Spark New Zealand has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Spark New Zealand is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Spark New Zealand. Refinancing is at 61, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 61% of its competitors. Liquidity is also good at 65, meaning the company generates more profit to service its debt than 65% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 24, which means the company has an above-average debt-to-equity ratio. It has more debt than 76% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 63 (better than 63% compared with alternatives), Spark New Zealand has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Spark New Zealand could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Spark New Zealand Lowest Financial Performance
COMBINED PERFORMANCE | August 3, 2023 | |||||||
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VALUE | ||||||||
VALUE | 29 |
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GROWTH | ||||||||
GROWTH | 29 |
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SAFETY | ||||||||
SAFETY | 65 |
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COMBINED | ||||||||
COMBINED | 24 |
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ANALYSIS: With an Obermatt Combined Rank of 24 (worse than 76% compared with investment alternatives), Spark New Zealand (Integrated Telecommunication, New Zealand) shares have lower financial characteristics compared with similar stocks. Shares of Spark New Zealand are low in value (priced high) with a consolidated Value Rank of 29 (worse than 71% of alternatives) and show below-average growth (Growth Rank of 29) but are safely financed (Safety Rank of 63), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 24, is a sell recommendation based on Spark New Zealand's financial characteristics. As the company Spark New Zealand's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 29) and low growth (Obermatt Growth Rank of 29), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 63) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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